(This article originally appeared in The Hill on February 20, 2019)
Congress and the president have finally agreed to fund the federal government for the duration of this fiscal year, thus avoiding another shutdown crisis — at least, for the time being.
But now, we implore policymakers: do not do this again. Let us take stock of the harmful economic impact the recent shutdown had and heed its lessons so that we avoid the self-inflicted damage that prolonged political stalemates in Washington can cause.
By the White House’s own estimates, the record 35-day shutdown slowed quarterly economic growth by 0.13 percentage points for each week it dragged on, while the Congressional Budget Office concluded that the total economic cost of the shutdown was $11 billion, $3 billion of which will never be recovered.
Behind these statistics are real human stories of lives disrupted as hundreds of thousands of federal workers, more than 4 million contractors, and their families missed their paychecks and were stretched to their limits to make ends meet. Others took on debt or prematurely tapped into their retirement accounts. A report released this month showed that 62 percent of federal workers affected depleted most or all of their emergency savings. The shutdown may have lasted for five weeks, but for the impacted families, its effects will be felt for years to come.
Additionally, from the technology industry’s perspective, there were many examples that showed how government shutdowns jeopardize innovation and economic opportunities. For example, the shutdown disrupted critical scientific research spearheaded by government entities. In some cases, researchers faced the unacceptable choice of ignoring furlough orders in order to tend to their research according to schedule, or letting those projects go to waste. When government-led research projects serving national interests are affected like this, it is not only the federal workers handling these initiatives that get hurt; the American people suffer as scientific and technical advancements stall and global competitors race ahead.
It is difficult to calculate the precise impact of the shutdown on employee morale, but no one can deny that the threat of future shutdowns will lead to a brain drain from government as dedicated public servants decide the price of serving our nation in government is too uncertain.
Second, the shutdown halted a critical engine of America’s innovation economy: the market for initial public offerings (IPOs). We believe one of the top bipartisan goals of all policymakers this year should be to promote pro-startup policies that help young companies grow and make it easier for them to go public. Pro-IPO policies are good for the overall economy, as research over the past half-century shows that companies experienced 92 percent of their job growth after going public. When startups go public, innovation flourishes, more jobs are created, and Main Street investors benefit from opportunities to invest in high-growth companies through their 401(k)’s and other investment vehicles. However, the recent government shutdown partially shuttered the Securities and Exchange Commission (SEC), which forced furloughed employees to stop reviewing proposed IPO filings, delayed IPOs planned for January, strained companies raising the capital they need to fuel growth, and led to a backlog that the agency is now working to overcome.
Furthermore, with the tax filing season starting in January for most U.S. taxpayers, the shutdown proved disruptive to individuals and small businesses as they attempted to interact with the Internal Review Service (IRS).
Finally, the recent shutdown interrupted the important work carried out at the U.S. International Trade Commission (ITC), which is reviewing the U.S.-Mexico-Canada Agreement (USMCA). We believe the administration has negotiated a strong trade deal worthy of congressional support, but delays in this critical review process mean it will be even longer before American workers and businesses of all sizes can enjoy the benefits of this modernized trade agreement.
The recent shutdown experience should remind policymakers that bringing critical government operations to a halt is not a viable way to accomplish political goals, and that a functioning and reliable government is essential to advancing American innovation.
The bottom line is, America and its citizens cannot afford another shutdown. We understand that an inability to resolve policy differences on immigration brought us to that point, but at the very least, we should all agree that there is no need to ensnare other departments and agencies that do critical work to ensure America’s economy can continue to create jobs and economic opportunities.
We commend congressional negotiators who worked in good faith to broker a bipartisan agreement that avoided another shutdown this month, but policymakers should now commit to never go down this path again. Not in September when this year’s budget expires. Not ever.